The American economy is on the brink of collapse. This is what the economists and the Republicans are predicting, and the Federal Reserve (FED) has also recently confirmed the ominous predictions. In fact, the only ones who still believe that the USA can avoid an economic disaster are the Democrats, who want to comfort their disillusioned electorate. Meanwhile, the latter is increasingly turning to the Republicans, who are expected to achieve a historic victory in the congressional elections next year. In Slovenia, we are not yet preparing for the economic collapse which is bound to come soon. In fact, it is quite the opposite. The Government of Robert Golob has declared war on the economy that will sustain us during the recession.
The United States of America are facing the highest inflation in the last forty years. The American central bank is fighting uncontrolled price growth by raising interest rates, which has a negative impact on economic growth. In fact, the negative impact is so big that at this point, the entire American public believes that a recession is inevitable. In fact, the only ones who are confident that they will manage to avoid the recession are the increasingly absent American President and some of his allies in Congress. But their words did not convince the American public, as evidenced by a record low consumer confidence in the economy, reports Politico.
“The bigger mistake to make – let’s put it that way – would be to fail to restore price stability,” the President of the US Federal Reserve (FED), Jerome Powell, commented on the increase of the interest rates. Namely, FED has made the decision to tolerate a recession rather than an uncontrolled rise in prices – inflation would be much more harmful to the US than a slowdown in economic growth. JP Morgan Chase does not exclude the possibility of a recession happening in this business quarter already, as data show that household spending has already started to slow down dangerously. Meanwhile, opinions on the nature of the upcoming recession are divided. Some experts say that the recession will be short and shallow, while others warn that it could deepen if the war in Ukraine does not end or if the recession were to trigger a housing market crash.
Political implications
The upcoming recession will especially hurt the Democrats, who are, for the time being, trying to ignore it. “A recession would be really problematic for the American people. Boy, are we ever too far from a recession,” congressman Jim Himes commented on the forecast. Meanwhile, the Democrats counter the ominous forecast by pointing to the economy’s rare bright spots. The United States of America still have high employment; investment capital is still flowing. This is how the Democrats are trying to reassure the American public, who increasingly believe their Republican colleagues more, who are warning of the coming economic disaster. Therefore, it is expected that the Democrats will once again focus on social issues next year. They are very aware of the fact that the American voters did not vote for them because of their attitude towards social dilemmas – and not because of their views on the economy. The American public trusts the Republican Party much more when it comes to economic issues.
And what is currently going on in Slovenia?
As major economic crises in the past have shown, a recession in the United States of America always spills over into a recession in Europe. However, ominous predictions from abroad have not yet shaken Slovenian politics. Instead, the current government is dealing with vengeful purges of the public administration employees and the state economy, as well as with the new media legislation that would help it take over the national radio and television once and for all.
It sounds absurd, but for now, it looks like the government of Robert Golob will try to further stifle the economy right before the recession (read: reduced economic activity). The Minister of Finance, Klemen Boštjančič, has already announced a comprehensive tax reform, which, in contrast to the tax amendments of the Janez Janša government, will not relieve the economy and individuals, but instead bring even higher taxes for them. The tax reform will supposedly include higher property taxes, higher taxation of profits, higher taxation of consumers, and the complete abolition of sole proprietors with normalised expenses. The announced tax reform will have a catastrophic effect on the Slovenian economy.
Andrej Žitnik
